ASEAN - Japan

·The Framework for Comprehensive Economic Partnership (CEP) between ASEAN and Japan was signed by the Leaders of ASEAN and Japan on 8 October 2003 in Bali during the ASEAN-Japan Summit.

Status

·Negotiations on ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement, which commenced in April 2005, were concluded in December 2007.

·ASEAN Member States and Japan completed the process of signing the AJCEP Agreement by circulation on 14 April 2008 and entered into force on 1 December 2008. For Malaysia, it entered into force on 1 February 2009.

·Although the AJCEP is based on the respective bilateral Economic Partnership Agreements (EPAs) signed by Japan with individual ASEAN countries, including Malaysia, there is substantial value-adding to these EPAs under the AJCEP.

·The AJCEP will be fully realised by ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) and Japan in 2015 when tariffs on substantially all products will be eliminated, except for those on the Sensitive Track. In 2015 Malaysia eliminated duties for 93.57 % of products in the normal track.

·For Services and Investment Chapters of the AHECP Agreement, the negotiation is currently on-going and is targeted to be finalized by end of 2015.

Benefits

·Overall, Japan continue to remain an important trading partner of ASEAN and a source country for FDI.

·The two-way trade between ASEAN and Japan reached USD229 billion in 2014, accounting for 9.04% of total ASEAN trade. Japan was ASEAN’s third largest trading partner after China and EU.

·Foreign direct investment (FDI) flows from Japan to ASEAN amounted to USD 13.3 billion in 2014. Japan remained the second largest source of FDI for ASEAN, accounting for 9.77% of total FDI inflows into ASEAN in 2014. EU countries as a group are the leading investor in ASEAN.

·The FTA is enabling ASEAN and Japan to share the huge resources available through joint collaboration to further promote the growth of both the manufacturing and services industries.

·For Malaysia, the AJCEP provides additional benefits in terms of immediate and accelerated elimination of duties for products vis-à-vis progressive liberalisation under the bilateral agreement with Japan i.e. Malaysia-Japan Economic Partnership Agreement (MJEPA). Some of the products which were not offered by Japan under MJEPA and had duty liberalized under AJCEP Agreement.